China's stocks surge, yuan firms as leaders pledge to shore up economy
CHINESE stocks climbed sharply and the yuan firmed on Tuesday (Jul 25), after the country’s top leaders pledged to roll out further policy support to shore up a flagging post-Covid economic recovery.
The blue-chip CSI 300 Index snapped a six-day losing streak by closing up nearly 3 per cent to record the best day since last November, while the Hang Seng Index jumped 4.1 per cent.
The yuan firmed to a near two-week high against the US dollar, with additional support from state-owned banks’ move to sell the greenback and buy the Chinese currency on Tuesday.
Beijing will step up economic policy support to focus on expanding domestic demand, boosting confidence and preventing risks, state news agency Xinhua cited the Politburo, a top decision-making body of the ruling Communist Party, as saying.
The promises to aid the economic recovery came a week after data showed China’s growth lost momentum in the second quarter as demand weakened at home and abroad.
While there were few details of the proposed measures, shares rose across the board, with tech giants and property developers leading the gains.
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Hong Kong-listed tech giants surged 6 per cent, while mainland property developers climbed 14.1 per cent after tumbling to around eight-month lows on Monday amid fears of a cash crunch and a lack of support from policymakers. Onshore real estate firms also rallied 8 per cent.
“We view the assessment of the economic growth situation and description around the property market as slightly more dovish than expected,” said Goldman Sachs analysts in a note.
China said it will adjust and optimise property policies in a timely manner, in response to “significant changes” in the supply and demand relationship in the property market.
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Foreign money flowed at a rapid clip, with overseas investor buying nearly net 19 billion yuan (US$2.66 billion) of Chinese shares via the Stock Connect on the day, logging the biggest daily inflow since December 2021. Week to date, foreign investors bought 13.8 billion yuan of Chinese stocks.
Other sectors, including consumer staples, financials, automobiles and new energy, rose between 2.2 per cent and 4.5 per cent.
Goldman Sachs expects Chinese authorities to roll out a combination of monetary, fiscal, property and consumption support measures in the next few months.
“A relief rally in assets could last a few days, as markets had low expectations heading into the Politburo meeting,” said Barclays in a note.
“We think markets will look at whether and how these (Politburo) statements are translated into actual measures.” REUTERS
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